EducationVolume 12 Issue # 13

Private schools minting money, really!

The admission process at various private school systems in Lahore and other cities in the country has just concluded, or is still under way. Mrs. Kashfa Kanwal Gondal was at the receiving end of a shocking experience last month when she went to a branch of a famous school system in Lahore to get her adopted daughter admitted there. After a so-called test of the student, Mrs. Gondal was handed over a sheet of paper carrying details of the amount she was supposed to pay. The list included the application fee, registration fee, a security deposit, an advanced monthly fee, annual stationary and paper charges, etc. The total showed that she would have to pay over Rs100,000 before her daughter enters the school building.

Fahad Zulfikar, another parent, says that there is nothing new in Mrs. Gondal ordeal. Almost all parents who opt for educating their children in private schools have to undergo the same tribulation.The government has badly failed to provide quality education to children at public sector schools and colleges. That’s why, he adds, parents have to admit their children to private institutions. In a talk with Cutting Edge, he says that primary victims of rising inflation in the education sector are poor Pakistanis, who are unable to afford ever-increasing fees being charged by private-sector schools and colleges. Even the cheaper schools charge Rs8,000 per month, the expensive ones up to Rs20,000, and the average reside around Rs12,000 per month. Besides this, you have to pay for stationary, books, notebooks, uniforms, transportation, and miscellaneous expenses almost every month, he adds. Mr. Zulfikar believes that the fee structure of private schools has not only badly affected the middle class, but it is now breaking the backbone of rich families also. While parents attribute the hike to commercialisation of education, the management in schools claim that mounting inflation, new taxes and losses force them to hike their fees each year. The State Bank of Pakistan (SBP) report, released in January 2017, showed that inflation for education in December 2015 was 8.8%, indicating that the sector remained in the grip of escalating fees and costly books and stationery.

Last year, parents took to the streets in Lahore, Islamabad and Sahiwal, voicing outrage at the inordinate increase in tuition and other expenses at private institutions. The government also enacted a law to regulate the private schools and keep a check on annual increase in school fees. However, the law was never implemented, once the protests subsided. Kashif Mirza, president of the All Pakistan Private Schools Federation (APPSF), however, defends his case strongly. In a talk with Cutting Edge in Lahore recently, he said that the private education system catered to nearly half the Pakistani population, particularly the middle and lower-middle classes. Article 25-A of the Constitution declares that it is the state’s responsibility to provide “free and compulsory education to all children from the ages of 5-16 years”. But the state has failed to fulfil its responsibility, he says, adding that the government should be thankful to the private sector for sharing its burden. Mirza says that quality education is not inexpensive anywhere in the world. The only difference is that funding comes from the governments or other sources. This explains why some of the best non-profit institutions in the world like Harvard, Princeton, Yale, Oxford and Cambridge, along with some of the leading Pakistani educational institutions, are also amongst the most expensive, he explains.

The APPSF president claims that private schools educate more than 50% of children in Pakistan, and nearly 60% in Punjab. There are 173,110 private schools all-over Pakistan: 97,810 are situated in Punjab, 32,850 in Sindh, 24,660 in Khyber-Pakhtunkhwa, 5,880 in Balochistan, 2,380 in Islamabad Capital Territory and 9,450 are functioning in Azad Kashmir and Gilgit-Baltistan. About 23,839,431 students are studying in these private schools. Approximately 15 lakh teachers work at these schools. On the other hand, says Kashif, over 9,000 public sector schools have been closed down only in the Punjab during the last one year, decreasing the number from 63,000 to 54,000 public schools. Almost similar is the situation in other provinces, he adds. In more recent times, he claims, private schools have been contributing to the creation of a progressive youth, who are playing their part in the development of a modern Pakistan.

The representative of the private sector claims that the cost of operating schools increases by an average of 15-20% per annum. Private schools do not exist in an economic vacuum: when the input costs of every sector of the economy are going up, how can private schools remain immune? Private schools are treated as fully commercial entities by the government. They pay 33% income tax, 17% GST, 3% Super Tax, 6% EOBI, 6% Social Security, heavy property commercialisation fees, commercial property taxes, school registration fee, registration visit fee, sports funds, school affiliation fee, affiliation visit fee, renewal fee of school registration, renewal fee of school affiliation, building fitness certificate fee, building hygienic certificate fee, endowment fund, commercial utility bills, service tax, professional tax, trade tax, building board rent tax, parking fee, sanitation fee, scouting fund, armed licences fee, and a host of other taxes and levies. He provides a long list of taxes, being charged by the government from private schools. On the one hand, Mr. Mirza says that 85% of the private schools charge below Rs.1,000 fee per month. There are 11% schools which charge below Rs.2,000 and only 4% schools are charging above Rs. 2000 per month, he claims. It is very clear from the data that 96% schools do not fall in the heavy-fee category. On the other hand, adds Mirza, the government data shows per student cost in a public school stands at Rs.7,960 per month. And the quality of education being provided there is known to everyone.

The APPSF president states that most private schools in Pakistan operate on rented premises. Rents increase by 10% per annum. Typically every three to five years, lease agreements are renewed, at which point landlords aggressively renegotiate lease terms. Landlords are aware that schools have limited options because their cost of relocation is very high. The compounded impact of annual rent increase (10%) and end-of-term lease renegotiation (any percentage)is an average of 15-20% or more per year. Besides, adds Mirza, staff and teacher salaries account for approximately 50% of the fee income of private schools. Teachers’ salaries are revised upwards, on average, from 10% to 20% per year but based on performance appraisal, in some cases, the increases are far higher. Average electricity expenses across Pakistan have increased by17% per annum over the last few years. Private schools pay the commercial tariff, which is the highest tariff category. Also, after December 2014, private schools have exponentially increased their expenditure on provision of security – a fundamental responsibility of the state. An additional 16% GST has further affected this cost. Over the past three years, on average, computer equipment has increased by 15% per annum, laboratory equipment by14% per annum, school furniture and fixtures by 18-20% per annum, vehicles by 12%, etc., with an additional 16% GST. In such circumstances, it is hardly possible for private schools not to increase the annual fee of students.

Kashif Mirza says that the government should exempt private schools from most taxes till the achievement of a 100% literacy rate in the country. Based on capacity, leading private schools should be encouraged to enter into public-private partnerships. He regrets that around 30,000 private schools have shut down during the past three years because of heavy taxation. If the government sincerely wants to promote education and enhance the literacy rate in the country, it should support private educational institutes and provide them maximum facilities, he demands.